In search of real estate for any use, residential, professional and commercial, there is a large number of Greeks and foreigners who are interested in investing or living in our country themselves, with the properties to be searched for having significant discrepancies both in terms of size and to selling prices.
But what are the prospects in the market today by geographical area and age of the property? What are the characteristics of a property to be demanded by an average household? Which markets have the greatest growth prospects? In the Report of the Bank of Greece on Monetary Policy that was made public, as well as in researches on the housing market that see the light of day, the situation in the real estate market and its prospects are described
The high-end market is growing
In the first months of 2023, the Greek real estate market, and especially its high-end property, continues to develop, the report of the Bank of Greece underlines. Despite the uncertainties that have emerged since the beginning of 2022, with the war in Ukraine, interest rate hikes and energy and material cost burdens, high rates of price growth have been maintained, as a result of strong demand and limited supply of space with modern technical characteristics. Inflationary pressures recorded in 2022 and continuing in the first months of 2023, as well as the renewed slowdown in the growth rate of construction activity, which for more than a decade has been affected by successive crises, contributed to the further increase in prices, with investors to continue bidding on the limited inventory.
Low supply of modern properties
The low supply of modern properties gradually leads to the diffusion of price increases to properties of lower technical specifications. At the same time, yields are kept at low levels for the market, but attractive for investors, as a result of which investment activity remains active both from abroad and from within the country. In the housing market, the BoE reports, upward trends in prices were maintained during the first quarter of 2023. More specifically, according to the apartment price indices published by the Bank of Greece from data-estimates collected by credit institutions, the nominal prices of apartments in the first quarter of 2023 were increased compared to the corresponding quarter of 2022 by 14.5%, while for the whole of 2022, based on the revised data, apartment prices increased at an average annual rate of 11.7%
Development by geographic region.
From the analysis of the data by age, in the first quarter of 2023 the growth rate in old apartments (over 5 years old) was higher (15.6%) than that of new apartments (12.8%), while on the contrary in 2022 the growth rate of new apartments was slightly higher. By geographical area, the two major urban centers of the country record stronger annual growth rates than the average annual rate for the whole of Greece, mainly due to the continued investment interest. In particular, for the first quarter of 2023, the Athens region recorded an average annual growth rate of 16.5% and Thessaloniki 16.1%, while for the whole of 2022, the respective growth rates were 13.7% and 12.5% .
The positive course of the residential real estate market during 2022 continued in the first months of 2023. In particular, in the first quarter of 2023, net foreign direct investments in Greece for the purchase of real estate recorded a significant positive annual growth rate (32.9%) and amounted to 0.5 billion euros, continuing the dynamic course of the previous year.
Developments in commercial real estate
In the commercial real estate sector, based on the data collected by the Bank of Greece, in the second half of 2022 the prices of high-end offices increased by 2.2% compared to the immediately preceding half-year, while the prices of high-end shops increased by 2.4%. In Athens, the growth rates for offices and high-end shops were higher, reaching 3.7% and 3.2% respectively. Increases were also recorded in office and shop rents of all categories, which amounted to 1.1% and 1.8% respectively at the national level, compared to the previous semester.
Based on the second half of 2022 Commercial Real Estate Market Survey, conducted by the BoE, minimum yields for high-end offices in the most commercial parts of the capital city center ranged between 5.6% and 6.4%, stable compared to the previous six months. High-end store yields in the most commercial locations of central Athens (Ermou Street), during the second half of 2022, are estimated to have ranged between 5.3% and 6.2%, also at the levels of the first half of 2022. In the same survey , expectations for the first half of 2023 were recorded as particularly positive for professional warehouses and high-end hotels, while a significant percentage of participants expressed low expectations for the store market, with the exception of open malls. At the same time, transit and professional warehouses of high technical and technological standards emerged as the sector with the most positive expectations for the next two years, especially in locations close to the urban fabric of Athens and Thessaloniki. Expectations are high for hotels and hospitality, as well as for offices with high bioclimatic standards, while special mention is made for investment housing and its more special uses, such as housing for the elderly with high-standard services.
As reported by the Central Bank of Greece, remarkable changes have taken place in the real estate market in recent times. Hyperlocal developments and major infrastructure projects in Athens, Thessaloniki and the surrounding area have created new interest for business activity and residence in different regions of the country. At the same time, the growing interest in green sustainable development and its integration, in several cases, into the corporate policy of large companies have already given impetus to the development of new high-end properties and will gradually lead to the movement of users towards them.
It is characteristic that major infrastructure projects and major urban renewals in our country also gain the interest of international media, which proceed with extensive reports. Last week, in an extensive report, Bloomberg referred to the largest urban redevelopment in Europe, in Elliniko, which is underway by Lamda Development, pointing out, among other things, that when the first construction phase of the project in Elliniko is completed in 2026, the site of the former Athens airport will be unrecognizable, underscoring that the privately funded project will transform the Greek capital. Emphasis is also placed on the fact of the high demand for pre-sales of real estate since the start of the project which has already been converted into practice, while it is pointed out that with the country still standing on its feet after a ten-year debt crisis, Elliniko is rising as a symbol of renaissance of Athens.
While major construction projects are curtailed in many parts of the world due to rising construction costs, rising interest rates and labor shortages, Greece is in an unusually strong economic position, it said.
On the way to upgrade the existing stock
The growing demand for properties of modern specifications is estimated to eventually contribute to the upgrading of the existing stock, which, if not adapted to the new requirements, will further depreciate. However, the real estate market will continue to be under pressure from increased inflation and interest rates, tight financing, high energy and material costs, and broader geopolitical uncertainty.
According to the Bank of Greece, these conditions, combined with the downward correction of values that is already taking place internationally, are estimated to direct investment interest towards sustainable investments and properties with lower operating costs, greater flexibility and quality levels that will ensure income generation and goodwill for a long time horizon. The Greek real estate market, presenting important peculiarities in relation to the rest of the real estate markets in Europe, is estimated to continue to maintain its attractiveness, especially for its high-quality stock
Which properties do buyers prefer based on square footage?
Properties with an area of more than 75 square meters are preferred by one in two buyers in Greece, essentially confirming the trend that has begun to prevail in recent years throughout the territory after the country’s gradual exit from the fiscal crisis and the memorandums. The data recorded in the annual survey of RE/MAX Greece, indicate that the Real Estate market in Greece closely follows international trends, where interested buyers prefer larger houses for the purpose of owning. On the other hand, no one can ignore the fact that there is still strong buying interest in smaller homes as well, as they enable their owners to rent them out and get significant returns.
In more detail, as shown by the data of completed real estate sales carried out nationwide in 2022 by the RE/MAX Hellas network, the “champions” in demand are homes with an area of 76 to 100 square meters as for every 100 sales, 27 related to the specific square. This is followed by properties from 51 to 75 square meters as 23.6% of buyers chose this square footage range, while 1 in 5 buyers preferred properties from 101 to 150 square meters. On the other hand, very large properties over 151 square meters were chosen, according to the data of RE/MAX Greece, by only 11 out of 100 buyers, while smaller properties of up to 50 square meters, based on sales made last year, were chosen by 17 out of 100 buyers.
In Attica, one in three buyers preferred properties between 76 and 100 square meters, while it is noteworthy that almost one in four buyers chose houses between 101 and 151 square meters (23.1% of the total). At the same time, small houses of up to 50 square meters were chosen by only 11 out of 100 buyers, while very large houses of more than 151 square meters were chosen by 14.5% of buyers. As for the residences with an area of 51 to 75 square meters according to the data of RE/MAX Greece, they were chosen by 1 in 5 buyers.
Source: RES-MPE
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